Singapore wholesale electricity demand hits new high in 2010

Ryan Huang Channel NewsAsia 13 Apr 11;

SINGAPORE : Singapore's electricity demand hit a record high in 2010, growing by nine per cent from the previous year.

This is according to data from the latest annual report by the Energy Market Company (EMC), which operates the wholesale electricity market, where electricity is bought and sold through a competitive trading system.

In 2010, average annual demand was at 5,008 megawatts, versus 4,603 megawatts in 2009. Last year also saw the highest average monthly demand, with 5,161 megawatts recorded in May.

With rising fuel prices, EMC expects to see upward pressure on power rates, but new capacity and a stronger Singapore dollar may help keep a lid on production cost.

Many companies increased their output in 2010 when the economy rebounded and pushed up the demand for power.

That higher consumption pushed the value of electricity sold last year to a new high of S$8 billion. That's a 24 per cent jump from the previous year.

The record could have been higher but it was partly held back by a strong Singapore dollar, which appreciated by 8 per cent.

"The factors that drove that were the unprecedented economic recovery that Singapore saw - the 14.5 per cent increase in the economic growth, (and) also the impact of international fuel oil prices. During last year, we saw WTI oil prices rise by 29 per cent," said Dave Carlson, EMC's CEO.

Last year, the strong demand pushed the average annual Uniform Singapore Energy Price (USEP), the benchmark for average wholesale price, to an all-time high of $171 per megawatt per hour. That's 16 per cent higher than the previous year.

And that could continue to rise this year in line with oil prices.

But so far for the first three months of 2011, demand has softened, with USEP in Q1 was $169/MWh, a 0.6 per cent drop from the last quarter of 2010.

EMC said this was due to a traditionally low demand due to festive holidays and cooler weather.

"The key thing for us is to ensure that we have the available supply coming on to meet that demand. And the good news is that there's a lot of new repowering projects, and new built projects already underway. That will ensure that Singapore has a good efficient generation that will be offered into the market. The more efficient, the more that we can contain the impact of increasing fuel oil prices if they continue, and also the increase in demand if the economy grows," said Carlson.

There will also be at least seven new plants expected to come up over the next three years. And at least two are being upgraded to become more efficient by running on gas, instead of fuel oil.

Around 80 per cent of Singapore's electricity is generated by power plants running on natural gas.

And most of this is piped in from Indonesia and Malaysia through long-term contracts, which are closely pegged to the price of fuel oil.

But Singapore could become less dependent on that, when its liquefied natural gas terminal comes online in 2013.

- CNA/ac/ls